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Chapter 13 Bankruptcy Process

Chapter 13 of the Federal Bankruptcy Code allows a consumer to repay all or a majority of his or her debts through a payment plan approved by the bankruptcy court.

When the plan is in place, creditors generally are not allowed to collect debts directly from the debtor. Instead of paying his or her creditors directly, the debtor pays a certain amount every month to the Chapter 13 Trustee (there are some exceptions, such as some leases payments that are made directly to the lessor), and the Trustee distributes the money to the creditors, as provided in the Chapter 13 plan. When the last payment is made, the debtor is no longer liable for the remainder of his or her dischargeable debts.

Most, but not all, debtors are better off filing off under Chapter 7. The means test will determine whether you have to file Chapter 13 and will be precluded from filing under Chapter 7.

Chapter 13 is preferable to Chapter 7 when:

	You own your home and you are in danger of losing it to foreclosure, but you could get caught up if given time. (ALERT: learn more about new Washington State Homestead Exemption for Bankruptcy cases)
	You are behind in your automobile payments, but can catch up if given time.
	You have valuable nonexempt property which you would like to retain and you can afford to pay creditors from your income over time.
	You have debts which are dischargeable in Chapter 13 but not Chapter 7 (e.g., debt incurred through fraud).
	You owe the IRS or the state for taxes.

In some cases, if you have high income and an ability to repay your debts over time (and that question itself requires a consideration of numerous factors), you may not be permitted a discharge in Chapter 7 and Chapter 13 is your only option.




As stated on other pages in this site:

The first question is whether you could get relief under either chapter.

Next, you decide which chapter gives you the best debt-discharge and asset preservation combination (which usually, but not always, is Chapter 7 over Chapter 13).

Finally, after deciding which path is best for you, we gather the necessary financial documents and prepare your Bankruptcy Petition. In the meantime, you must complete a credit counseling class. After reviewing your petition with you, we will file it. Once the Bankruptcy Petition is filed, creditors are forbidden from contacting you personally. After your petition is filed, you will need to attend a 341 Hearing, which is typically a very straightforward and relatively painless process. Once you are through the 341 Hearing, your qualifying debts will be fully discharged approximately 60 days later.




At the Law Offices of Lawrence S. Lofgren, we serve the Greater Seattle area including: Everett, Lynnwood, Edmonds and Bothell.

Please call us for a free consultation:

Seattle: (206) 624-3644  
Everett: (425) 953-4364